2011 Starts With a Thud

FILED FEBRUARY 25, 2011

Dear Client:

Domestic beer shipments for January were down 4.4% or nearly 600k barrels, on top of an easy comparison of -8.8% last year. That's the worst two year performance I've ever seen. Of course, we're coming off a strong shipment number in November and December last year, and likely the terrible weather and higher gas prices in January failed to sell a lot of that beer through. The weather has been improving somewhat lately, so perhaps we can write off January and move on down the road.

CRAFT WINS THE GAME. SUPERBOWL WINNERS AND LOSERS

At the BA's January Power Hour, Symphony IRI's Dan Wendel delivered a cautious early read on Super Bowl sales. He usually likes to look at the two-week period surrounding the blockbuster beer drinking event, but with only the first one to go off of, he called the game in favor of crafts.

"Craft would have won the Super Bowl, period, in supermarkets," he said, "up 15% in cases versus year-ago, and over 17% in dollars. They gained almost a full share point in volume and over a share point in dollars; in c-stores, it was a PAB segment from a volume perspective (case sales grew 19%). Then he said it was "nice to see some growth coming from premiums in c-stores." When full two-week numbers were released, most of that held relatively true, but that last part didn't last; numbers he delivered for the full two-week period ended Feb. 13 brought premiums slightly down in that channel, and certainly overall.

Overall, craft, PABS and cider gained the most momentum. The craft and PAB segments both grew about 12%; cider 19%. Domestics were down less than a percent, sub-premiums, 3%.

PER CHANNEL: C-stores were also a boon for craft, where they had a 14% boost in case sales. The rising drug store occasion were good to all categories except for PABS (1.4% loss), malt liquor and non-alcs (which lost 27%).

California and areas of the South were kindest to all beer sales. Interestingly, domestic super premiums, which have done well elsewhere, were down in the Mid-South, however, by 12 percent. Craft was up the most in the Great Lakes Region, almost 22% up with 155,014 case sales. California was the kindest to domestic premium of all regions, where case sales grew almost 4% to 2,245,133.

TOP BRANDS. Phusion Projects gained a lot of traction here as the No. 11 vendor with almost 50% growth in case sales over last year (178,191 sold). Of the top six regulars, all were down except for Crown (No. 3), which posted a 3.7% gain. Craft and a couple of PAB brands round out the rest of the top 15, with Mark Anthony Brands (9) posting a 48% growth, and Sierra Nevada (No. 11) up 12%.

Further down the list to top 50, Modelo Especial (29) raised case sales 25%; Blue Moon (35) grew case sales 10.7%. Coors Light, No. 18, had the biggest success for macros, up 4%.

YEAR-OVER-YEAR COMPARISONS. It was the best and worst of times compared to the last few Super Bowl beer-buying years. The category overall has been sliding since the two weeks surrounding the Super Bowl, having reached a high of 45,518,552 cases sold in that time period in 2009 to 43,503,060 this year. Domestic premiums, sub-premiums and supers all charted the larger 3-year slip. But crafts have been up just as consecutively. This year, up about 14% in dollar and 12% in case sales.


CRAFT GROWING IN OTHER METRICS, TOO

In the latest 26 weeks, the average amount of time between purchases for craft beer buyers in supermarkets has declined, according to research provided to BBD by Catalina Marketing, the shopper driven marketing/coupon folks, who tracked data in over 16k stores for this study. In fact, craft beer was the only beer category that had a decline in purchase cycle (which is good -- it means craft beer buyers are buying their beer more frequently). In comparison, the average time between purchases for economy brands increased by 5.8%, for super premiums it increased by 2.2%, for imports it increased by 0.9%, and for premium lights it increased by 0.8%. Interestingly, premium full calorie domestic purchase cycle remains even with last year.

Another metric commonly used in consumer packaged goods, but curiously rarely in the beer business, is "share of requirements." Share of requirements is brand volume of a buyer divided by the category volume for that buyer. So if a Corona buyer buys 2 cases of corona and 8 cases of other beer per year, Corona's share of requirement is 20%. You can also calculate share of requirement for entire beer categories, which Catalina has done (for consistent shoppers who visit a store at least twice over 8 weeks). Not surprisingly, for the last 26 weeks ending 1/31/2011, craft beer buyers satisfy 28.1% of their entire beer category purchases with craft beers. That number is an increase over last year of 0.6 points, the largest gain of any beer category. Economy brands have seen their share of requirement go down 1.9 points, imports down 1 point, premium domestic full calorie down 0.7 pionts, super premium up 0.1 points, and premium lights up 0.4 points.

FIRESTONE WALKER MOVES EAST

With craft's unabated growth in recent months, we figured we could search "Firestone Walker" in our e-mail and turn up some impressive-numbered, overlooked press release. But the most pertinent result was an admission from Sam Calagione that FW Double IPA was among his favorite at January's Big Beers, Belgians and Barleywines fest.

Not that FW didn't grow last year; in fact, at 80,000 barrels, they were up 35%. But the famous Delawarean's favor is something Firestone Walker has seen a lot of -East-Coaster demand. So the West Coast-based brewery is starting to ship a portion of its high-gravity beers - Parabola, the anniversary blend, Abacus, Double Jack, and Walker's Reserve - to major markets in the opposite coast. Maryland was the most recently announced; David Walker says D.C. and Philly next could be next for the Proprietors Reserve beers.

These more robust titles will travel well, and who knows what sort of footprint the brewery could have years down the line? "We're looking in all the major markets in the East to sell these beers," says David. "But to put it in perspective, it's less than 3% of our volume." Ultimately the company will continue to focus on serving fresh beer in its backyard, or "a deeper piece of a small pie," as David says.

It's easy to get distracted with all of craft's crazy strides, he says. But for Firestone Walker, the art of 2011 will be managing the new physical expansion intelligently. They're adding a new brewhouse, fermentation area and "proper" restaurant, according to the Englishman. If the industry can be as focused, the gains will be big.

"I think market share will change fundamentally, but not in the next five years. In my lifetime. We're just starting the journey," David says.


THE FIRST IPA VARIETY PACK, FROM FLYING DOG

We reported yesterday on Flying Dog's new Imperial IPA Simcoe, and now we've learned exactly what they're going to do with it. Jim Caruso told BBD they're releasing an IPA variety pack called The Alpha Collection in Maryland on April 1. "Once we see how fast it's pulling through, we'll rollout it out to VA and DC," he says.

The four pack will include Doggie Style Classic Pale Ale, Snake Dog IPA, Raging Bitch Belgian Style IPA, and a rotating exclusive Imperial IPA, which will start with Simcoe, then move to the next in the series, a single-hop Centennial. There are few if any IPA variety packs in the states, so this is a new foray.


Until tomorrow, Harry

"Humor is also a way of saying something serious."
-T.S. Eliot

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